Trade Example – EUR/JPY

Filed under: Learn Forex Trading |

There was a nice little trade setup on the EUR/JPY forex pair (the pair for the euro and the Japanese yen) yesterday that I missed, and I would like to run through this trade setup right now.

Figure 1.

 

To begin with, take a look at Figure 1. This is the daily chart for the EUR/JPY pair and this is the timeframe that we look at to assess the trend and mark in any significant levels of support and resistance. As you can see, the 8-day exponential moving average is crossed above the 21-day exponential moving average, and it has been for some time. This tells us that the market is bullish. There is also a nice level of support/resistance (marked with a horizontal green band) that price is pulling back to, so we should be on the lookout for any bullish price action signals at this key level.

 

Figure 2.

If you now look at Figure 2, you will see the 4-hour chart for the same EUR/JPY pair. What you can see here is that a nice bullish pin bar formed right at the aforementioned level. What we could have done here (had I not been buying pottery in Stoke-On-Trent!) was put an order in to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the move, and with a target of two times our risk. As you can see, our order would have been filled very nicely and our target would have been met for a very nice 2% rise on our bank. Unfortunately, we did miss this one, but it is one that we would have otherwise taken. Well, that’s it for today, and I’ll be back tomorrow with another forex price action trade example. Until then… have a great day.

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